On June 30, PJSC “Ukrnafta” published details of a contract signed on March 3 with the German law firm “Hengeler Mueller Partnerschaft von Rechtsanwalten mbB” for legal services worth €90,000, reports Baltimore Chronicle with reference to the Prozorro public procurement system.
Under the agreement, Hengeler Mueller will provide legal support regarding the enforcement of a decision issued by the Arbitration Institute of the Stockholm Chamber of Commerce on September 24, 2010, in case No. 124/2007. The claim was brought by U.S.-based Carpatsky Petroleum Corporation against Ukrnafta, with the total claim amount exceeding $190 million. The case is being pursued for enforcement in Germany.
The procurement was carried out without an open tender, as it concerns legal services. According to the justification document, in 2010 the arbitral tribunal upheld Carpatsky Petroleum Corporation’s claim and ordered Ukrnafta to pay $146.9 million in compensation, along with accrued interest. As of today, the total debt exceeds $190 million.
In 2015, Ukrnafta lost its appeal before the Svea Court of Appeal, making the arbitration award final and enforceable internationally. Permission to enforce the ruling has already been granted in France, the Netherlands, Germany, the United Kingdom, and in the state of Texas, USA. Under German law, the claimant has the right to initiate court proceedings for enforcement until February 15, 2025. The case is currently being reviewed by the Higher Regional Court in Celle, Germany. This legal context necessitated the engagement of professional counsel in Germany to manage issues related to enforcement of the arbitration decision.
According to Ekonomichna Pravda, in 1995 Ukrnafta and Carpatsky Petroleum signed a joint development agreement for the Rudovsko-Chervonozavodske gas condensate field. Ukrnafta held 55% in the joint venture “Ukrkarpatoil,” while Carpatsky Petroleum, registered in Texas, held 45%. However, in 1996, a different company—also named Carpatsky Petroleum but registered in Delaware—claimed ownership of the JV share. The Prosecutor General’s Office of Ukraine contested the succession procedure, and a ruling by the High Commercial Court of Ukraine eventually awarded Ukrnafta 100% ownership in the joint venture.
In 2010, the Stockholm arbitral tribunal ruled that Ukrnafta had breached the agreement and must pay $146.9 million in compensation, additionally declaring the contract void. Sources from Kommersant-Ukraine within Ukrnafta indicated that the arbitration was initiated not by the original Texas-based company, but by the newly established Delaware entity with a different ownership structure.
According to Naftorynok, in 2007—after arbitration proceedings had begun—Carpatsky Petroleum Corporation was acquired by Kuwait Energy. In 2018, Kuwait Energy was in turn acquired by United Energy Group (Hong Kong), whose controlling shareholder (51.60%) is 70-year-old Chinese billionaire Zhang Hongwei.
Zhang Hongwei is listed among the 50 wealthiest individuals in China and is actively involved in the oil and energy sector. In 2010, his company United Energy purchased oil assets in Pakistan from British Petroleum for $775 million. Later, United Energy received a $5 billion credit line from the China Development Bank to develop those assets.
Hengeler Mueller is one of Germany’s leading commercial law firms, specializing in areas such as mergers and acquisitions, finance, litigation, and legal representation.
Earlier we wrote that Ukrnafta last year increased the drilling volume by 280%.